HPE announced the core parameters of its new GreenLake Flex Capacity for partners late last year, but now, in deep consultation with partners, have developed what they believe will be an effective model by which the channel can monetize it.
LAS VEGAS – Today, at the Global Partner Summit that kicks off HPE Discover here, Hewlett Packard Enterprise is announcing a new partner program that will replace the old complex and referral-based model for partners delivering HPE GreenLake Flex Capacity with a new one where partners will work directly with HPE and sell to customers themselves. It has been designed to accommodate the challenges of effectively monetizing a pay-per-use model within the structures of a broad partner program.
The new announcement delivers on pledges HPE made last November at HPE Discover in Madrid, where the company announced seven new preconfigured Flex Capacity offerings. What was not made clear then – but is now – is a mechanism by which partners would be able to take these to market on a resell model.
“This is an evolution of what was announced last November,” said ML Maco, Senior Vice President of HPE Pointnext worldwide sales. “At HPE Pointnext, we have been in the consumption business for over seven years, so it’s not uncharted territory for us. We have built the service to over a billion dollars worth of value. Last November, we launched a partner plan, and we had some partners get off to good early starts. However, we started to work with partners to evolve and change some things in that original program, and those changes are what we are announcing now.” Maco said that over 100 partners took place in this iteration process, and that these new changes were largely driven by them.
“We are announcing GreenLake Flex Capacity for partners,” said Max Ramos, Flexible Capacity & Consumption Lead at Pointnext Worldwide Channel Sales, who is responsible for GreenLake’s indirect business. “The foundation of this program is Flex Capacity, which is a true flexible consumption model for partners. Last November, we announced the umbrella brand. However, we haven’t sold true consumption through the channel up until now. Before the introduction of this new model, we had a co-selling motion where if a customer wanted consumption, we sold it direct with an agency fee for the partner. We also had a convoluted buyback process. We did it that way to fit it into the existing partner program based on a hardware and services model. Now, we now selling true consumption through the channel that partners can lead with, with no more separate buyback. The initial contract created will be sold directly through the channel, and for FY 19, we will have consumption as part of the core program.”
Part of the development process that HPE has been working on since November also involves a way of jigging the compensation model so that more revenues to the partner come up front, rather than rolling out incrementally over a four-year contract period.
“We are also announcing a new rebate structure through which partners can earn deal margin and rebates,” Ramos said. “The challenge with earning margin selling Flex Capacity has been that it is over four years. The new structure will help partners break even in the first year and also reward their sales reps. The trigger we use to help them with this is a rebate that is significant in size and payable on the full value of the deal up front. It is payable to the partner within a quarter of closing the deal.”
While the program involves significant changes to many partners’ business models, some of them have already made the evolution around other types of services, and almost all understand that this is what the market now demands.
“With all partner conversations, across the board, they see that customers are doing business differently,” Maco said. “They see the market changing and look for us to come to the table with a program that they can monetize. With this program, we can align with the partners and move together.”
“The feedback from our top partners has almost been universal,” Ramos said. “They say that software went this route almost a decade ago, and they know they have to adjust their model. The more as-a-service they can get, the more they can add value. Many of them have already done this. Many have their own private cloud offers and managed service offers. Many also see that they can use this to assist customer retention. They know they need to be sophisticated about addressing it.”
Ramos described the anticipated partner participation in this program as select, although not small.
“Any Partner Ready program member can resell GreenLake, but they need to understand the complexity of this model and that it’s not for all kinds of customers,” he indicated. “It’s for those who have growing capacity. but need to be able to control those costs and map them to actual business growth. We expect that early on this will be sold by a large base of Platinum and Gold partners, who have experience in the public cloud and on-prem, and who have the consulting services necessary to advise. We expect to develop a fairly broad base of partners who are selling it over the next year or so. We have a Digital Transformation competency that partners can take to be effective at this. It will cover both sales and solution architects, and the plan is to have it ready for mid-July.”
Seven preconfigured and pre-priced solutions that partners can quote to customers are available, around HPE 3PAR, AzureStack, HPE Converged System 700, HPE Gen10 blade servers, HPE SimpliVity, HPE StoreOnce, and HPE Synergy. The operative theme around them is simplicity, responding to partner requests on this point.
“This proposal quoting process used to take three weeks,” Ramos said. “It now takes 30 minutes to two hours to get a proposal generated, which will allow conversations to be around use cases instead.”